Arizona schools forced to divert funding to repair buildings

by Bob Ortega - May. 22, 2011 12:00 AMThe Arizona Republic

Tony Malaj worries for a living.

"Here, look at this," he says, pointing to a long crack in the wall below a window outside Power Ranch Elementary School in Gilbert. "We've repaired this twice already this year." Cracks snake everywhere, caused by a shifting foundation that's slowly pulling the school building apart.

The problem isn't how to fix it. For Malaj, who manages buildings and facilities for the Higley Unified School District, the problem is how to pay for it.

Across Arizona, scores of school districts are using money they had set aside for textbooks to fix air-conditioners and leaky roofs, laying off maintenance workers and having teachers sweep their own classrooms, putting off repairs and hoping nothing major breaks down.

Malaj and his counterparts around the state are wrestling with the fact that, for the fourth year in a row, the Arizona Legislature has siphoned almost every penny from the state's school-repairs fund to help plug the budget deficit. Under the state's Students FIRST law, school districts should get $242 million for building repairs and renovations in the new fiscal year, which begins July 1. They'll get barely more than 1 percent of that - $2.66 million - and only for emergencies.

The near-elimination of the state's building-renewal fund for schools is part of a broader set of cuts to K-12 education spending, which makes it harder for districts to shift funds from somewhere else without affecting classrooms.

By not providing building-renewal funds four years running, the Legislature in effect is creating a system of "have" and "have-not" districts, in which poor districts increasingly struggle to keep classrooms safe and comfortable, says Tim Hogan, executive director of the Arizona Center for Law in the Public Interest.

Hogan is no random observer. Twenty years ago, he sued the state on behalf of four school districts, arguing that relying on property taxes to fund schools was unfair to poorer communities and was unconstitutional. In communities with high property values or lots of businesses, homeowners could pay relatively low tax rates and still raise plenty of money to build nice new schools. But in districts with low property values and few businesses, homeowners could pay much higher rates and still wind up with students in shabby, even dangerous, old buildings.

The Arizona Supreme Court agreed. Twice, it shot down Band-Aid approaches by the Legislature. Finally, facing a court deadline to fix the system or see all public schools closed, in a 1998 special session the Legislature passed Students FIRST (Fair and Immediate Resources for Students Today) to have the state pay directly for new schools and school repairs. It created the School Facilities Board to set minimum standards for all school buildings and distribute funds for new schools. It provided $1.3 billion to fix deficiencies and agreed to a building-renewal formula to parcel out money to maintain and renovate existing buildings.

The new law also cut the amount of money school districts could raise through bonds by two-thirds, based on the notion that almost everything would be paid for out of the state's general funds.

But the next year, the Legislature balked at funding its own building-renewal formula, sending the districts back to court in 1999 and again in 2001. Those cases were consolidated and dragged on for nearly 10 years before being dismissed late last year, Hogan said, after the court told districts that they had to exhaust all of their available funding before they could sue.

The huge program to fix deficiencies was stretched out, the funds allocated and the last projects completed in 2006.

By then, lawmakers had decided the building-renewal formula was too expensive. Unwilling to raise state-level taxes and facing tougher economic times, from fiscal 2006 through 2008, they put in only about half of what the formula called for. Then they suspended the building-renewal program entirely; instead, each year since, they've chipped a few million dollars into a small grant fund for renovations and repairs.

Since 2006, the state has provided less than a fifth of what the building-renewal formula in the law called for. Including next year's budget, over the most recent four years, school districts will have received 2 cents of every dollar they were supposed to get.

"We're almost exactly back where we were in 1991 when we filed the original lawsuit," says Hogan. The poorer the districts, the more they're on their own, he says.

Running out of money

As state funding has withered, many schools are running out of money to pay for even essential needs.

The amount of funding each district was supposed to get under the building-renewal formula varies according to how many students and school buildings it has, among other factors. Districts were to set aside some of the building-renewal funds they'd get each year to save up for big repairs. Some have had to spend their funds faster than others.

But with almost no money coming in, those savings have dwindled. More than half of school districts now have either no building-renewal money or less than $1,000 left, according to an analysis by The Republic. Even with reduced bonding capacity, however, better-off districts, such as Chandler, Scottsdale, Tempe, Deer Valley and Fountain Hills, are able to raise money to cover the shortfalls and keep schools in relatively good shape by turning to their voters. Elsewhere, districts are scrambling.

"We have $179 left in our building-renewal fund," says Chris Schultz, director of operations at the Camp Verde Unified School District, an hour south of Flagstaff. One elementary school's leaky roof needs to be replaced because water doesn't drain properly. "That's $80,000. We don't have it. So we spent $6,000 to move the scuppers lower to drain the water better, and we're patching and repairing and trying to hold off for another few years," he says.

The district needed new buses, too. Schultz just bought two 10-year-old used ones, for $50,000, instead of one new one for $120,000. There are many other items on his list.

Where's the money coming from?

"We had $78,000 set aside these last two years to buy textbooks," he says. "We didn't buy any." Instead, "we're rebinding our old textbooks and buying used ones."

The Murphy Elementary School District in Phoenix hasn't a penny left in the building-renewal fund for its four schools. It, too, has put off buying textbooks and last year laid off some of its custodial and maintenance staff, said Larry Weeks, the district's business manager. Now it's cutting back food-service hours, and having other employees, who haven't had a raise in seven years, take a week's furlough. "We're budgeting as best we can, but if something comes out of the blue, we're stuck," Weeks says.

Constant maintenance

The Roosevelt School District in south Phoenix was one of the plaintiffs in Hogan's 1991 lawsuit. When Roosevelt voters passed a $60 million bond in 2007, the district hit its bonding cap, says Mary Beyta, the superintendent. And while it's great having two brand-new schools, other school buildings up to 60 years old require constant maintenance - which means more belt-tightening. Beyta says they've had to defer some maintenance and increase median class sizes from under 24 students per teacher to 26.

At the Valley Union High School District, in tiny Elfrida in the southeastern corner of the state, Superintendent Ron Aguallo doesn't expect the $25,000 in his building fund to last long. The school's walk-in freezer is rumbling and gurgling in a disturbing manner. "If that goes out, it's going to cost us $20,000 to replace, and I don't have that in my maintenance-and-operations budget," he says. His maintenance staff keeps telling him, too, that the roof can be patched only so many times. "You can only whittle away so much," he says. "We don't know when the rainy day is coming, but it's starting to sprinkle."

Nearby, at Elfrida Elementary School, where the K-4 building dates to 1953 and the middle school to 1973, the carpeting will stay frayed, the potholes will remain in the parking lots, and the school won't be repainted for a couple of years, says business manager Sue Moyer. The district is saving the scant $2,600 in its building-renewal fund for an emergency.

The School Facilities Board, which administers state funding for school repairs, does have a $2.66 million emergency-deficiencies fund to cover every school building in the state - the equivalent, on a square-foot basis, to a typical Phoenix homeowner having $44 on hand to fix anything that goes wrong with the house.

And things can go wrong in a big way. In the spring of 2009, when roofs collapsed at schools in Tempe and Tolleson - miraculously, without hurting anyone - and another sagged dangerously at a Fountain Hills school, John Arnold, then-director of the School Facilities Board, said the board would help all districts look for warning signs that other roofs might be overloaded. But he warned there was no money to correct problems they might discover. In the end, the board did help pay for limited repairs at a few schools; but for the most part, districts had to shoulder the costs of inspections and repairs themselves.

Inspections needed

Apart from the issue of finding money to pay for repairs, overall budget cuts are also reducing the state's ability to identify small problems before they become major ones.

While some maintenance issues are obvious, others - such as fire-alarm or sprinkler flaws, potentially dangerous wiring, or elevated CO{-2} levels - may come to light only when trained inspectors visit. By state law, the School Facilities Board is supposed to inspect every school once every five years and do spot checks to make sure districts carry out preventative maintenance properly.

On the schedule the regulations call for - 20 districts spot-checked every 2 1/2 years - it would take about 28 years to hit every district. The board is well behind schedule on its five-year inspections too, because of budget cuts that trimmed inspectors to justone full-time person with part-time help from several others.

Of the 13 preventative-maintenance reports completed in 2009 - the most recent reported so far - the board found issues with the fire-alarm systems at six school districts. While all of the districts say they've fixed or are fixing those systems, it does raise the question of how many schools yet to be inspected might have the same types of problems.

Dean Gray, the board's executive director, says most of the issues that inspections turn up are less pressing and the money to fix emergencies has been enough so far.

"I don't know why they aren't asking us for funds," he said recently. "Every time I visit a district, I identify projects. We don't grant every project, but we don't discourage schools from applying for funds."

But district officials around the state say they're all too aware there's no point in applying in most cases.

"We know that's a shallow well," says Camp Verde's Schultz. "They just helped us to get rid of mold on our walls because the paint was no good. So when we talk about fixing the roof, I'm brainstorming what we can do because they're not going to listen to us coming back to them year after year."

Cutbacks to staff

Even at the wealthier districts, money they can raise from bonds and overrides is restricted and can't pay for the salaries of maintenance staffers, who are being laid off or seeing hours cut back.

"We have a really supportive community, and we've been able to pass overrides and bonds on a regular basis," says Bill Myhr, superintendent of the Fountain Hills School District. "We still have to cut $600,000 from our maintenance-and-operations budget" because of broader state cuts in education spending.

Myhr said it's the fourth straight year of budget cuts. Custodians clean the main hallways only; teachers have to clean their own rooms. Other maintenance, such as replacing air filters or burned-out lights, and making minor repairs, is down to three days a week - likely twice a week next year, he says.

At the Tempe Elementary School District, "we've lost five maintenance staff over the past four years, and we're taking an additional 5 percent cut this year," says Steve Pomroy, who manages the school facilities. "Our custodial staff has lost 16 positions."

Pomroy says they've had to defer more than 100 maintenance projects, such as resurfacing parking lots.

Even at Scottsdale Unified, whose voters approved a $117 million bond issue last November, "we're just limping along," says David Peterson, assistant superintendent for operations. Peterson said last year's bond won't catch up with all of the needed renovations and fixes at the district's 32 schools, many of which are more than 50 years old.

When a 32-year-old air-conditioning compressor conked out last month at the Arcadia Neighborhood Learning Center, workers turned to eBay to find parts that are no longer being made. The first day of school, in August 2007, the chiller went out at Yavapai Elementary. Replacing it, and trucking in a portable for six weeks in the meantime, cost $220,000. There's wiring to fix, fire alarms to upgrade, roofs to redo.

So the district plans to ask voters for another bond issue in two years, Peterson said. Without the bonds, "we'd be on the verge of not being able to operate some of our schools. The systems would be non-functional."

Higley Unified plans to cut a dozen administrative positions, 30 teaching positions and at least 10 other positions to deal with a $4.5 million budget shortfall next year.

"We're down to 2004 funding levels," said Malaj, Higley's director of educational-support services. "How do you maintain a district of 10 schools at the same funding level we had in 2004 when we had only three schools?" He's currently negotiating with the builders and engineers over who'll pay to fix the foundations at Higley's four damaged schools.

Sympathy lacking

Legislators who've voted to suspend the building-renewal formula for the past few years aren't necessarily sympathetic toward the districts. Some agree there's a problem; some aren't so sure.

"We've spent almost $2 billion to upgrade schools since the School Facilities Board was created in 1998, and we're still building new schools," says Rep. John Kavanagh, chairman of the state House Appropriations Committee. His two children went to public schools in Fountain Hills in the 1990s.

Grousing that "when you spend other people's money, the sky's the limit," Kavanagh says he thinks the state shouldn't have reacted to the original funding lawsuit by cutting bonding capacity and paying for schools out of general funds. The Republican says there should be another way to make up the funding shortfalls for poorer districts.

Sen. Rich Crandall, chairman of the state Senate Education Committee, said he had a tough fight to push through a bill, recently signed into law by the governor, that temporarily doubles school districts' bonding capacity. He expects that to help some 20 districts that have supportive voters but have used up their bonding capacity.

"This is only a Band-Aid, and only helps those school districts that can bond," he said. But the Mesa Republican added that though he thinks this is going to be a very tough year for schools, he has promised to introduce legislation next session to address schools' long-term capital needs. It isn't clear yet what shape that will take.

"Everybody runs saying they support education, but in the past three years in a row we've made the largest cuts in the history of the state to education," says Rep. Eric Meyer, a Democrat who is also a member of the Scottsdale Unified School District board and has two children in public schools there. "Certain representatives are there to reduce the size of government and cut government funding, and that means cutting education. But especially in the older districts, we still have a lot of schools not built to any code. The physical structure of our facilities is deteriorating; you can see that with roof collapses and all kinds of things."

Arizona ranks low

National school-spending studies don't break out spending on maintenance and renovation. However, more generally, according to the National Education Association, Arizona ranked last in education spending per pupil in 2008-09, the most recent year for which national data is available. Such rankings can be affected by many issues, including how many students are in urban or rural communities, how many have special-educational needs, and so on. A recent study by Bruce Baker, a Rutgers associate professor who studies school finance, ranked Arizona 46th in per-pupil spending, adjusted for such variables. Baker also measured funding as a percentage of the state's gross domestic product; Arizona ranked 40th.

Meanwhile, schools continue to scramble for money where they can. Many districts were able to use federal stimulus funds last year for energy-saving projects - replacing some old air-conditioning systems, for instance. But that was a one-time shot of money, now gone.

Some of the more financially fortunate districts have found other avenues.

The Chandler Unified School District has set aside funds each year for more than two decades to build up a $25 million rainy-day fund, says spokeswoman Terry Locke. Higley has cultivated partnerships with local businesses that have brought in $600,000 in corporate donations, and sponsorships for things like buses and athletic uniforms. Almost all districts are scrabbling for any grants they can find.

All across Arizona, "we're trying everything we can to stretch the dollars," says Greg Wyman, assistant superintendent at the Tempe Union High School District. "We've done more with less than practically any other state in the country."